Adopt Resolution #15-02-040 Calling for a Public Hearing on the Intention to Issue General Obligation Street Reconstruction Plan Bonds and the Proposal to Adopt a Street Reconstruction Plan

Purpose:  To provide funding for road reconstruction and bituminous overlays via the issuance of Road Reconstruction Plan Bonds.

Background:  Over the past several years, much discussion has taken place over the financing of road improvements.  These needed improvements:  Sealcoats, Overlays and Reconstructions are based on the 60-year Long-Term Street Maintenance Program that the engineering department had compiled on all of the city's streets based on a PASER rating (the lower the PASER rating, the worse the road).  Based on the Long-Term Street Maintenance Program, it was estimated that the highest priority projects averaged $2.2M over the first five years and increased after that.  Of the estimated $2.2M, $500,000 would be funded from the General Fund and the remainder from the issuance of debt.  The payment of said debt would be paid from an annual tax levy and assessment to benefiting parties.  
 
As the city will not be assessing 20% of the total bonded debt, the city cannot issue Special Assessment Bonds to fund road construction.  Another alternative that was put in place in 2002 (for road reconstruction only) was the Street Reconstruction bond.  Not until 2013 was the use of Street Reconstruction bonds allowed for overlays. Thus, the city is looking at issuing Road Reconstruction Debt for those projects (Garnet Street and overlay projects) as outlined for 2015 under the street maintenance plan and included in the City's 2015-2019 Capital Improvement Plan (CIP).
 
There are requirements that need to be followed if the City desires to issue Road Reconstruction Plan Bonds.  The requirements are:  1.  A Five-Year Street Reconstruction and Overlay Plan (SROP) must be prepared.  The City's five year as presented, is based on the highest priority street projects that Engineering had outlined in their Long-Term Street Maintenance Program and which are also outlined in the City's 2015-2019 Capital Improvement Plan (CIP).  2.  City Council must hold a public hearing on the issuance of the bonds and Street Reconstruction and Overlay Plan.  The public hearing request is the first step of the bonding process that needs to be undertaken for financing the road improvements which is what is being requested at tonight's meeting.  The major requirement to allow the city to issue this debt, is that the City Council must approve the sale of the street reconstruction bonds by an unanimous vote of its membership present.

Like a Capital Improvement bond, the Street Reconstruction bond is not required to have a referendum, but a reverse referendum is allowable.  If a petition bearing the signatures of at least 5 percent of the votes cast in the last general election is filed with the City Clerk within 30 days after the public hearing regarding the bonds (March 10, 2015), the bonds may not be issued unless approved by voters.



 

Ehler's and Associates, the city's financial consultants has prepared a schedule of events outlining the timeframe of the bonding process for the 2015 road improvements (Garnet & Overlays).  They have also prepared a Five-Year Street Reconstruction Overlay Plan (SROP) based on the Long-Term Street Maintenance Program prepared by the Engineering Department and also depicted in the city's 2015-2019 Capital Improvement Plan (CIP) as required by statute. 

The following schedules are attached for your review:  The bonding schedule of events, Five-Year Street Reconstruction and Overlay Plan 2015-2019, and the debt service payment schedule for the funding of 2015 Projects Only (Garnet & Overlays).

Observations:
The Five-Year Street Reconstruction and Overlay Plan 2015-2019 shows bonding schedules for each of these respective years.  Statute states that a Five-Year plan must be produced outlining projects and costs for the next five years.  If the city does not wish to follow this schedule (with the projects that are listed) over the next five years a new five-year plan will need to be devised.  For example, if projects A-E are included in the five-year plan and the city wishes to do project F instead of B, the plan needs to be amended and the public hearing process will need to be undertaken again on the revised plan.  The city is proposing to bond annually as years 2016-2019 in the plan are based on current engineer cost estimates and an annual inflationary factor.

Alternatives:

#1.  Motion to Adopt Resolution #15-02-040 Calling for Public Hearing on Street Reconstruction Plan Bonds and Proposal to Adopt a Street Reconstruction Plan

#2.  Motion to not Adopt Resolution #15-02-040 at this time

The issuance of Street Reconstruction Bonds will fund the Garnet Street and overlay improvements as outlined in the Long-Term Street Maintenance Program and the 2015-2019 CIP.

Staff recommends Alternative #1 as this is only a request for a public hearing on the debt issuance and street plan.  Preliminary approval of any debt issuance is not until March 10, 2015.

Motion to Adopt Resolution #15-02-040 Calling for a Public Hearing on the Intention to Issue General Obligation Street Reconstruction Plan Bonds and the Proposal to Adopt a Street Reconstruction Plan